Why not require all vendors to submit standard invoices? If you are like me, you can immediately start thinking of reasons this will never work but it has already worked for some. For years trading partners using SAP have utilized edi to send invoices in a predetermined format.
With the continual pressure to reduce cost, many corporations are moving to electronic invoicing but paper still constitutes the majority of invoices. To reduce the cost of processing paper invoices many corporations are implementing OCR solutions such as the optional OCR included with SAP Invoice Management by Open Text. Having a standard format for invoices would significantly enhance the OCR process. Even for those entering invoice meta data manually, standard invoice format would significantly reduce the time per invoice.
With a standard format, it would be expected that the vendor logo be located in one section and header information would always be found in the same place. Typical line item details would also always be consistent in format. The standard may need to be of several variations such as one for services and another for goods. The format should also be international so as to include relevant tax information.
Changing is never easy but a onetime investment in the effort could reap continual rewards in efficiency. While it would not be realistic to expect 100% participation, even if a corporation achieved 50% standard format invoices, major improvement would result.
The continuing pressure on profitability may be just the impetus to facilitate moving an old idea into the mainstream.
See SAP EcoHub for More on AP Optimization
Thursday, January 28, 2010
Thursday, January 21, 2010
AP and Hot Topics for 2010
The following are four Accounts Payable “hot topics” I see for 2010…
1) Paper is still with us! It appears that the movement to electronic invoices continues but at a slower pace than might have been expected. Paper invoices are still the most common form of invoice receipt. The good news is that Optical Character Recognition has improved and the focus is now on accuracy in reading the line item information accurately matching to the PO line. There appears to be greater cooperation between suppliers and their customers to ensure the necessary information is available on the invoice required for proper matching. The optional OCR for SAP Invoice Management by Open Text is being adopted by many SAP centric AP departments.
2) Whether driven by the economy or the desire to increase value to the corporate stakeholders, many corporations are moving to a shared service center for Accounts Payable. The concept of moving the functions to a cheaper labor pool and calling it shared services has had mixed results. What has been exposed is that locating AP in a remote geographic location can result in communication issues. Problems go unresolved for longer periods of time. To facilitate world class shared service centers, corporations are implementing enterprise solutions such as SAP Invoice Management by Open Text to provide controlled business processing. Not only are these solutions improving the day to day transactional processing they are generating information to internal and external clients that allow for continual business improvement.
3) Fraud is nothing new to corporations but too often the focus has been on reporting that detects the fraudulent activity after it has been committed. The cost of fraud recovery can be staggering. Many corporations pay out 30% - 50% of their gross revenue back out to suppliers through Accounts Payable. The fraudulent actives around AP are well documented but until recently, prevention was dependant on a human catching the attempt. In 2010, corporations are moving to implement business rule driven solutions that test for activities such as billings from suppliers not in their system. In addition these solutions provide the metrics to highlight trends such as a single vendor continually overbilling.
4) Last but certainly not least…Accounts Payable personnel are being recognized for the Professionals they are. Organizations such as International Accounts Payable Professionals (IAPP) are providing focus on the power of an Accounts Payable Professional. As mentioned above, AP is critical in fraud prevention. In addition, the optimization and automation of the day to day processing has allowed AP to focus on cash management improvements, improvement in accuracy of financial statements through accurate liabilities and proper inventory valuation and providing thorough and timely financial information to stakeholders from Operations to the CEO. It is becoming common for corporations to require a professional certification of all Accounts Payable personnel upon realization that Accounts Payable is a key component in a world class business!
See SAP EcoHub for More on AP Optimization
1) Paper is still with us! It appears that the movement to electronic invoices continues but at a slower pace than might have been expected. Paper invoices are still the most common form of invoice receipt. The good news is that Optical Character Recognition has improved and the focus is now on accuracy in reading the line item information accurately matching to the PO line. There appears to be greater cooperation between suppliers and their customers to ensure the necessary information is available on the invoice required for proper matching. The optional OCR for SAP Invoice Management by Open Text is being adopted by many SAP centric AP departments.
2) Whether driven by the economy or the desire to increase value to the corporate stakeholders, many corporations are moving to a shared service center for Accounts Payable. The concept of moving the functions to a cheaper labor pool and calling it shared services has had mixed results. What has been exposed is that locating AP in a remote geographic location can result in communication issues. Problems go unresolved for longer periods of time. To facilitate world class shared service centers, corporations are implementing enterprise solutions such as SAP Invoice Management by Open Text to provide controlled business processing. Not only are these solutions improving the day to day transactional processing they are generating information to internal and external clients that allow for continual business improvement.
3) Fraud is nothing new to corporations but too often the focus has been on reporting that detects the fraudulent activity after it has been committed. The cost of fraud recovery can be staggering. Many corporations pay out 30% - 50% of their gross revenue back out to suppliers through Accounts Payable. The fraudulent actives around AP are well documented but until recently, prevention was dependant on a human catching the attempt. In 2010, corporations are moving to implement business rule driven solutions that test for activities such as billings from suppliers not in their system. In addition these solutions provide the metrics to highlight trends such as a single vendor continually overbilling.
4) Last but certainly not least…Accounts Payable personnel are being recognized for the Professionals they are. Organizations such as International Accounts Payable Professionals (IAPP) are providing focus on the power of an Accounts Payable Professional. As mentioned above, AP is critical in fraud prevention. In addition, the optimization and automation of the day to day processing has allowed AP to focus on cash management improvements, improvement in accuracy of financial statements through accurate liabilities and proper inventory valuation and providing thorough and timely financial information to stakeholders from Operations to the CEO. It is becoming common for corporations to require a professional certification of all Accounts Payable personnel upon realization that Accounts Payable is a key component in a world class business!
See SAP EcoHub for More on AP Optimization
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